Sunflower oil in Ukraine are used to, that the price of sunflower seed
is linked to the price of sunflower oil in the international market. In this
marketing 2012/13, the right game have changed. Now we see that the price of
oil fell and the price of oilseeds grown. Refiners’ margin decreased. What is
the reason?
The last marketing year is generally perceived as a success for the
industry. In Ukraine, according to IA "APK-Inform", was a record
harvest of sunflower - 9.4 million tons, of which produced a record amount of
sunflower oil - 3.85 million tons. Industry working at full capacity and has
been provided with raw materials completely. A similar situation exists in
Russia. Two countries of the Black Sea region to were realized their export
potential and were expanding their presence in the international market of
vegetable oils. We have seen that the sunflower oil in a year replaced soybean
oil tenders in Egypt. India - succinct, but very sensitive to the price of the
market, also significantly increased its purchases of Ukrainian sunflower oil.
It should be noted that the increase in the proportion of sunflower oil
on the world market of vegetable oils has been achieved due to low prices.
During the whole of last season, the price of sunflower oil in key markets was
lower than soy. For example, on the basis FOB six northern European ports, this
difference was on average 100-120 USD / t.
Industry Outlook
We understand that in the context of a global recession internal
situation will only get worse. We already know that the President of Ukraine
Viktor Yanukovych signed into law on November 15 № 5480-VI, which gives the
right to the National Bank of Ukraine (NBU) to enter for up to six months of
mandatory sale of foreign exchange earnings and reduce the time of its return.
NBU has already exercised his right and cut back period of currency in 2 times,
and introduced compulsory sale. I think that the next steps in this direction
will not be long in coming. Our state will seek financing from a new, triple
force. This year will be rich in the authorities' attempts to share financial
success of sunflower oil’s industry and foreign currency earnings.
There is also quite disturbing trends deficit of sunflower seeds on the
market, which began to manifest itself in the last year, and this year in their
full strength, supported by inflation expectations. Our farmers are not
hardened first devaluation of the currency and, in general, believe only in the
U.S. dollar and the physical product that will grow in value if inflation
starts. How justified expectations of inflation? We see the efforts made by the
State and the National Bank, to avoid devaluation of hryvnia. But in actual
fact - it is a crisis of liquidity - banks do not have money, loans at 25% per
annum, the interbank overnight sometimes as high as 70%! Therefore, the choice
of alternatives is small - or stagnation and crisis, or inflation, or both.
Expectation of inflation or crisis - is one reason the supply shortage
of sunflower seeds, but there is another. For years, we have seen that from the
various farmers' associations and large agricultural holdings held organized
containment sales of sunflower seeds. And, apparently, this long-term trend.
The reason for this - a new balance of power and productivity, and this was a
turning point. Below are some numbers and calculations.
First, the long-term yield of sunflower grown at the same rate as
production facilities for processing. Secondly, the area of agricultural land
in Ukraine is limited and is 41.5 million hectares, of which the cultivated
area 32.5 million hectares. From year to year, these values remain virtually
unchanged. The area under sunflower this year is 5.2 million hectares. Proper
crop rotation sunflower - once in 8 years. Multiply the area by 8 and 42
million hectares, and it exceeds the area of farmland. I beg to note that not
all areas are suitable for the cultivation of sunflower, respectively, in the
past year, we have reached the upper limit of the possible yield. Third, the
production capacity continues to grow. According to forecasts of APK-Inform, if
the trend for commissioning new facilities will continue, by 2015, the total
capacity will be 2 times larger than the sunflower crop. Hence, if all the
companies will work with the same load, yield enough for six months of work. Of
course, will be a struggle for the harvest. And in this struggle will win not
oil producers, and the producers of sunflower seed. In the race for the harvest
will benefit the company:
- With good logistics (the closer to the raw material and ports, the
better);
- With good infrastructure (more places of acceptance of goods - more
opportunities to buy raw materials);
- Well-funded (percent of hryvnia loans up to 25% per year. If producers
have to borrow at such a high percentage, then in that case make banks, not
farmers);
- With good modern equipment (as always, are important factors for the
extraction of oil from sunflower seeds, as well as energy efficiency);
- With the ability to finance the crop (farmers will sell raw materials
fall to the person who helped financially in the spring);
- The company that will be able to process soybeans and canola, have an
additional opportunity to upload their company.
APK-Inform
